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India Equity Research Reports, IPO and Stock News
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http://www.kotaksecurities.com/pdf/dmb/MorningInsight23022012.pdf
ARSHIYA INTERNATIONAL
PRICE: RS.154 RECOMMENDATION: BUY
TARGET PRICE: RS.185 FY13E P/E: 6.6X
Arshiya (ARST) starts commercial operations at Khurja - we are
positive on company's FTWZ business
ARST has started its Khurja FTWZ with 2 warehouses and we estimate the
company to ramp it up to 4 by end of FY13E. The company is already
operating 4 warehouses at Panvel FTWZ and we estimate the company to
ramp it up to 8 warehouses by end of FY13E. We also expect the VAS to
rental ratio to improve from current 1x to 1.5x by FY13E and further to 2x by
FY14E. We are positive on the company's FTWZ business and estimate
revenues for the segment to grow at more than 100% CAGR to Rs 3.2 bn
over FY11 to FY13E, with the share of the segment increasing from 3% in
FY11 to ~25% in FY13E. In the rail segment the company operates 16 rakes
currently which they would ramp up to 20 by end of FY13E. The company
also intends to take about 10 rakes on lease during the same period. The
company wants to integrate its entire rail operations with its logistics
business and FTWZ business and run these rakes primarily on the domestic
segment. The company continues to grow steadily in its core third party
logistics (3PL) businesses. The stock at CMP of Rs.154 trades at 6.6 times
FY13E earnings, below the average one year forward trading multiple of
peer companies of 10x. We expect the company to deliver revenue CAGR of
24% over FY11 to FY13E to ~ Rs 12.7 bn with improvement in operating
margins from 19.4% in FY11 to 24.2% in FY12E and 26.9% in FY13E. With
improvement in margins and benefits of aggressive capex accruing to the
company going ahead, we expect the return ratios of the company to
improve. High leverage, execution delays and poor acceptability of the key
FTWZ concept are some of the pitfalls and can be a drag for the company.
Consequently we value the company at 25% discount to the one year
forward multiple of peer group companies in the Logistics space which
comes at Rs 185. The discount captures the risks on account of the high
leverage position of the company. We rate the stock BUY with a one year
price target of Rs.185.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/dmb/MorningInsight23022012.pdf
ARSHIYA INTERNATIONAL
PRICE: RS.154 RECOMMENDATION: BUY
TARGET PRICE: RS.185 FY13E P/E: 6.6X
Arshiya (ARST) starts commercial operations at Khurja - we are
positive on company's FTWZ business
ARST has started its Khurja FTWZ with 2 warehouses and we estimate the
company to ramp it up to 4 by end of FY13E. The company is already
operating 4 warehouses at Panvel FTWZ and we estimate the company to
ramp it up to 8 warehouses by end of FY13E. We also expect the VAS to
rental ratio to improve from current 1x to 1.5x by FY13E and further to 2x by
FY14E. We are positive on the company's FTWZ business and estimate
revenues for the segment to grow at more than 100% CAGR to Rs 3.2 bn
over FY11 to FY13E, with the share of the segment increasing from 3% in
FY11 to ~25% in FY13E. In the rail segment the company operates 16 rakes
currently which they would ramp up to 20 by end of FY13E. The company
also intends to take about 10 rakes on lease during the same period. The
company wants to integrate its entire rail operations with its logistics
business and FTWZ business and run these rakes primarily on the domestic
segment. The company continues to grow steadily in its core third party
logistics (3PL) businesses. The stock at CMP of Rs.154 trades at 6.6 times
FY13E earnings, below the average one year forward trading multiple of
peer companies of 10x. We expect the company to deliver revenue CAGR of
24% over FY11 to FY13E to ~ Rs 12.7 bn with improvement in operating
margins from 19.4% in FY11 to 24.2% in FY12E and 26.9% in FY13E. With
improvement in margins and benefits of aggressive capex accruing to the
company going ahead, we expect the return ratios of the company to
improve. High leverage, execution delays and poor acceptability of the key
FTWZ concept are some of the pitfalls and can be a drag for the company.
Consequently we value the company at 25% discount to the one year
forward multiple of peer group companies in the Logistics space which
comes at Rs 185. The discount captures the risks on account of the high
leverage position of the company. We rate the stock BUY with a one year
price target of Rs.185.
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